Attorney General Martha Coakley yesterday accused two more of the state's automobile insurers of trying to overcharge their customers, this time by more than $25 million.
Coakley requested hearings before Insurance Commissioner Nonnie S. Burnes to challenge the 2008 rate filings of Arbella Mutual Insurance Co. of Quincy and Hanover Group of Worcester. She earlier requested hearings on the filings of Commerce Insurance of Webster, Safety Insurance of Boston, and Premier Insurance of Worcester, which she said overcharged customers by a total of more than $100 million. The Jan. 9 Commerce hearing is the only one scheduled so far.
While Coakley insisted she was calling for a hearing only if a company's rate filing was excessive, a group representing many of the state's automobile insurers accused her of being opposed to competition and making "baseless and inflammatory claims" in the bulletins she has released over the last two weeks.
"The AG should stop hiding behind rhetorical bulletins and just say that she doesn't want competition and that she will use all of her resources, especially during the competitive rate hearing process, to prevent it," said James Harrington, executive director of the Massachusetts Insurance Federation, in a statement.
Coakley responded that it's unclear now whether managed competition will result in lower rates for consumers or increased profits for insurers. Either way, she said, it's her job to protect consumers, while the top priority of insurance companies is to make money.
"Don't pretend that you have the consumer's best interest in mind," she said, referring to the insurers.
For the first time in 30 years, the state is moving away from a system where regulators approve one set of auto insurance rates for all the companies and replacing it with a system called "managed competition" where each company sets its own rates subject to regulatory approval.
Coakley represents consumers in this new rate-setting process, and Burnes will serve much like a judge. Burnes's spokeswoman said each rate filing will be subjected to "a rigorous and thorough review process." It is unlikely Burnes will reject Coakley's hearing requests.
Coakley said the filings of Arbella and Hanover were similar to the other three companies in that they inflated expenses and loss projections and padded profits.
John Donohue, the chief executive of Arbella, said he was surprised at Coakley's hearing request since his company is seeking an average rate cut of 7.7 percent, one of the largest in the industry.
"It appears the attorney general has inexplicably singled out companies who filed for the largest rate decreases, an action that appears to be anything but proconsumer," Donohue said.
A Hanover spokesman said he was confident the company's rate filing was a "good and fair one and ultimately will be upheld."
In a separate letter to Burnes, Coakley's top insurance aide, Glenn Kaplan, raised concerns about the way most of the insurers increased their base rates and then offered discounts from the higher base rates. He also said some of the discounts offered by insurers may be proxies for rating factors that Burnes has banned, such as income, homeownership, and age.
"The companies should be required to explain to policyholders the relationship between the base rate increases and the 'discounts,' and to make clear that the 'discounts' reduce artificially inflated rates and may not actually discount rates for many policyholders," Kaplan wrote.
Bruce Mohl can be reached at mohl@globe.com.
